Pimco believes market concerns over the Federal Reserve's credibility in fighting inflation are overblown, and current US Treasury yield levels appear attractive.

Marc Seidner, the firm's Chief Investment Officer for Non-Traditional Strategies, anticipates the Fed will keep interest rates unchanged this year, despite market pricing indicating a 50% probability of a 25-basis-point rate hike at the next meeting. He points out that inflation and economic growth momentum are slowing, with fundamental data showing weakness.

However, he notes that the yield curve may steepen as fiscal pressures weigh on long-term Treasuries. "There's very strong emotion in the recent discussions and narratives around the Fed," Seidner said in an interview. "There's really not much basis for it. I think the Fed has credibility."

Seidner shared his views on the inflation outlook, the US economy, and Fed policy. Ongoing tensions in the Middle East and the cautious stance of Fed Chair Kevin Warsh on policy intentions have stirred volatility in the US bond market, prompting some fund managers to shift to other markets. Traders are now awaiting key US inflation data due later Wednesday.

Seidner advises investors to ignore the noise around potential Fed rate hikes and instead focus on the "amazing" opportunities in fixed income. "There will be periods of rate declines over the next few years," he said, adding that current absolute yield levels are highly attractive.